Q3 2021 Lexicon Pharmaceuticals Inc Earnings Call

[music].

Good afternoon. My name is in Italian and that will be a conference operator today at this time I would like to welcome everyone C. D. Lexicon Pharmaceuticals, Inc. Third quarter, 20th 21 financial results Conference call.

All lines had been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question and answer session.

If you ask a question you would need to press star one on your telephone if you would like to withdraw your question press. The pound key. Thank you I would now like to turn the call over to Mister Chavis Schulz Executive director of corporate Communications and Investor Relations. Please go ahead Sir.

Kinda tell Ya good afternoon, and welcome to the Lexicon Pharmaceuticals third quarter 2021 financial results Conference call.

Joining me today are lienau coats lexicons, Chief Executive Officer, Jeff Way, Lexicons, President and Chief Financial Officer, and Doctor, Craig Random words, lexicon, Senior Vice President and Chief Medical Officer.

Earlier today lexicon issued a press release announcing our financial results for the third quarter of 2021, which is available on our website at www Dot Lex Barbara Dot com and through our SEC filings.

A webcast with this call a long with a slide presentation is available on our website. During this call. We will review the information provided in the release provided corporate update and then use the remainder of our time to answer your.

Before we begin let me remind you that we will be making forward looking statements, including statements relating to the safety efficacy and the therapeutic in commercial potential of soda flows and Alex 9211, and other drug candidates.

These statements May include characterizations of the expected timing and results of clinical trials of Soda Cup Logan L X 9211, and other drug candidates and the regulatory status and marketing and market opportunity for those programs.

This call May also contain forward looking statements relating to our growth and future operating results.

Discovery and development of our drug candidates launch and commercialization plans for any approve products strategic alliances and intellectual property as well as other matters that are not historical facts or information.

Various risk may cause our actual results to differ materially from those expressed or implied in such forward looking statements.

He's risk include uncertainties relating to the timing and outcome of her plan N D. A filing for soda Cup Logan in heart failure, and our discussions with the F. D. A regarding soda closer and relating to heart failure and type one diabetes. The success of our commercialization efforts with respect to any approved products the timing and results of clinical trials in preclinical.

Studies of soda can frozen Alex 9211, another drug candidate our dependence upon strategic alliances another third party relationships our ability to obtain patent protections for discoveries limitations imposed by patents owned or controlled by third parties and the requirements of substantial funding to conduct our research and development activity.

He's.

For a list and a description of the risks and uncertainties that we face. Please see the reports we have filed with the Securities and Exchange Commission I would now like to turn the call over to Lienau codes.

And can chest good afternoon, everyone and thank you as always for joining the call.

It was a very busy and very exciting third quarter for lexicon, we continue enrolling patients in both of our phase two studies for Alex 9211, and we remain very focused on obtaining topline results from those studies in the first half of 2022 later in the call. We will remind you of the uniqueness of this <unk>.

Graham However.

However, we will spend most of our time this afternoon laying out the exciting opportunity for soda floated in heart failure.

Perhaps the most important scientific event and a quarter came from new heart failure guidelines established by the European Society, Cardiology or E. S C.

We believe a new market will dawn for S. G. L. T inhibitors in heart failure as a result of these new guidelines.

Nick slot S. C O T inhibitors have traditionally been viewed as highly effective type two diabetes therapies. However, new evidence has emerged in the last couple of years supporting the benefits of S. C. O T inhibitors for people suffering from various forms of heart failure clinical.

Clinical data from three therapies and S. C O T class and packed with flows in the packet flows in an hour investigational drug soda Plaza.

Had been the primary drivers of an increasing body of evidence showing that heart failure patients can also benefit from these therapies. Many of these benefits are being observed and particularly challenging areas with heart failure, where there are currently no effective treatment options such as heart failure would preserved ejection fraction or referred to as have pet.

During the quarter the European Society Cardiology, one of the most preeminent Medical Association and heart failure issued new guidelines for the diagnosis and treatment of acute and chronic heart failure, which clearly establish S. C. O T inhibitors as part of the standard of care.

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We believe additional guideline changes from other respected medical associations will follow also elevating S. C. O T inhibitors, two part of the frontline treatment for heart failure for many of you who followed lexicon over the last number of years. This was my prediction and it's really pleasing to see it come to fruition.

And you can see on the next slide the heart failure market is projected to rapidly expand over the next several years global data estimates that the market will grow from $3.7 billion in an in an overall gross sales and 2018 tobar $22 billion and 2028.

Representing a compound annual growth rate over 19.5%. This growth is expected to be driven primarily by the adoption of S. G O T inhibitors as part of the standard of care.

If approved soda flows and we have an opportunity to play a major competitive road and is rising market.

Much of our confidence lives in a differentiating advantages. We believe are provided by soda can flows dual S. U L. T. One and two inhibition, including unique benefits worsening heart failure.

Dr. Craig round of which will take you through some of the data that gives us his confidence that S. C O T class and the unique opportunities soda the flows and may have to help the class grow and heart failure.

Jeff wait will Dan sure, how we were thinking about efficiently entering the market and leveraging the opportunity.

Greg I'll turn the call to you.

Thank you and L and good afternoon, everyone.

I appreciate the opportunity to share some of these important new medical advances in the S. G. L. T. Two class for the treatment of heart failure I would like to take another look at the treatment guidelines slide.

The European Society of Cardiology is one of the most important medical associations in the cardiology space with a global reach and impact that includes the United States at the annual meeting was held at the end of August during which it issued the first major update to the heart failure treatment guidelines since 27.

17.

Traditionally there have been three pillars of therapy constituting the cornerstone of care and heart failure. These include the eighth or been Arnie class.

Beta blockers and M R. A.

Ideally patients are prescribed drugs from each of these pillars of care.

To give you a perspective on us approximately 90% of heart failure patients are on a beta blocker and 80% plus are on an H R. R.

As you can see in this graphic S. G. L T inhibitors or added by Ese as a new pillar and it's standard of care for heart failure.

S. G. L. T inhibitors were given its high level of confidence with a one a rating which reflects the guideline committees high confidence in the quality and rigor of the clinical data supporting their use in the treatment of heart failure.

So essentially overnight the ese guidelines catapulted S. G. L. T inhibitors from not being included on the list for heart failure treatment to being established as part of the standard of care along with these other treatment agents.

Currently S. G. L. T inhibitors are used in only approximately 5% of heart failure patients. So we expect to see a tremendous growth opportunity for their utilization in this space.

On this slide the impact of the Ese guidelines on the sequencing of treatment is quite striking.

In a review published in the European Journal of Heart failure. Shortly after the publication of the E. S. C guidelines, leading experts such as Doctor Milton pack or out of the United States and Professor John Macmurray out of Europe laid at the impact on the sequencing of care for new heart failure patients.

Conventional sequencing of treatment for a new heart failure patients has called for the initiation of and a sore are followed by a beta blocker than an M R and a and Arnie and finally, an S. G O P inhibitor and you can note at the bottom of the slide this treatment paradigm generally takes six months or more.

Each step.

Aren't easy step for are represented by the market, leading therapy, Entresto, which had worldwide net sales of approximately two and a half billion dollars and 2020.

Those sales should provide some perspective on the market potential for a new heart failure treatment.

On the right you can see the new sequencing of treatment that doctors Packer and MC Murray are proposing given the new ese guidelines and the growing body of clinical evidence breast yahtzee inhibitors. As you can see they are proposing is scheduled would you initiate the beta blocker and S. G. L T inhibitor immediately.

Upon outpatient starting new treatment.

We believe this paradigm shift and the treatment of heart failure will be transformative and provide the potential for substantial growth is S. P. O T inhibitors are established that the new standard of care.

When you dig deeper into the new way ESG guidelines, you will see their specific recommendations around the use of S. C O T inhibitors and heart failure.

At the base of the pyramid they identified five S. C O T inhibitors, including soda with those and.

Is showing benefit in reducing cardiovascular events in high risk patients for future major cardiovascular events of.

Of the five drugs soda <unk> is the only one not currently approve or on the market.

As you move up the pyramid, you'll see that three drugs Dapagliflozin epica flows and soda or a person are recommended for the treatment of heart failure with reduced ejection fraction or have rats in patients with diabetes to reduce future.

Failure related events.

At the top of the pyramid, you see only one drug soda <unk>, which was identified for the treatment of worsening heart failure.

Worsening heart failure is when the heart failure patient experiences an acute event requiring urgent treatment or hospitalization.

Our soloist Faith Street outcome study was conducted in this exact patient population and.

And soda <unk> is the only SDLP today with outcomes data in patients in this acute hospital setting.

We believe this particular point in the heart failure patient journey represents a unique potential competitive advantage for soda or a person and will be the primary point of engagement. If we receive regulatory approval and bring soda go clothes in the market.

Our goal is very specific.

When a patient enters a hospital with an acute event or worsening heart failure, we want soda go <unk> to be the preferred option for initiation before leaving the hospital.

We think these updated ESC guidelines recognize this uniqueness soda with those.

And this slide is important to understand the impact of heart failure on the patient.

Unlike many areas of cardiovascular heart health and disease, such as elevated cholesterol and.

In heart failure, there is a tremendous burden and patients that greatly impacted their lives on a daily basis.

Heart failure is not a silent disease.

Heart failure patients truly feel this disease and readily appreciate the impact it has on their daily lives.

These are some representative quotes from patients living with heart failure from a qualitative study published earlier this year.

A common complaint is shortness of breath. It is associated with fluid buildup and the inability for the heart to effectively distribute oxygen rich blood to the body.

This affects their ability to focus and create tremendous physical burden for patients to accomplish their normal activities.

As you can see the daily impact is tremendous.

Ever the biggest impact comes from acute events requiring hospitalization.

And this slide shows the typical progression of patience occurring in those suffering from heart failure here.

As you can see patients are subjected to chronic impact of the <unk>.

Gradually of roads or cardiac function over time.

<unk> does its best to compensate for this decline and however, there are typically multiple acute events, where the patient suddenly and rapidly declines requiring hospitalization for treatment.

<unk> typically become severely short of breath and incapacitated due to their still fluid buildup, often resulting in the sensation of drowning.

Patients in this condition may be in a life or death situation by.

By definition their current treatment is not working so there is a high need an openness to change in the treatment regimen, both from the patient.

And healthcare Provider's perspective.

Unfortunately patients made likely like we face is acute events multiple times throughout their lives with about one in four patients requiring rehospitalization within 30 days following hospital discharge and two thirds of these patients within their first year of hospitalization.

The circled events on this slide Mark the exact point of engagement. We studied in the soloist clinical study, where we initiated treatment soda with <unk> and hospital setting or within three days after hospital discharge or data. In this regard are unique to date amongst <unk> S. T. L. T class and provides specific inside.

And how soda with that person could benefit patients in this potential life or death situation.

Looking forward, we believe that soda <unk> has the potential to show meaningful different differentiation in the treatment of heart failure and in other aspects of cardiovascular benefit amongst DSTL T class given it to unique dual S. T O P. One and S. G L T two inhibition.

Our data and heart failure was generated from two large phase three clinical outcome studies hold soloist and scored both of which were published and to confirm New England Journal of Medicine articles and included many groundbreaking first.

Our soloist study was conducted in more than 1000 patients with diabetes, who had recently and hospitalized for an acute event of worsening heart failure.

This was the first study in the class to show benefit in this particular point in the patient journey.

Scored was a longer term outcome study conducted in more than 10000 patients with diabetes chronic renal disease and other risk factors for cardiovascular disease and shared the same primary endpoint soloist.

Taking a quick look back at the diagram for the heart failure patient journey you can see how are two phase III outcome studies demonstrated the benefits of soda with posting on heart failure.

And the soloist study, we look specifically at patients with type two diabetes, who have been hospitalized as a result of an acute event of worsening heart failure patients were initiated on soda or a <unk> or a placebo either before discharge from the hospital or within a few days after discharge.

Scored study was just designed to evaluate the benefits of soda with those in patients with type two diabetes or at risk of heart failure or a mace event.

This slide shows data from our soloist study looking at the primary endpoint of total see the gap.

Hospitalization for heart failure, an urgent heart failure visits in patients with type two diabetes they.

There are three important points I'd like to note on this data.

The first is the extraordinarily high rate these very expensive events.

You will see that the placebo arm had 98 events for 100 patients over the 18 month study period.

This means that on average each patient had approximately one event over a year and a half.

This really speaks to the point, we highlighted earlier that people suffering from chronic heart failure are expected to experienced multiple acute event over their lives that will require them to suddenly enter the hospital.

Second when you look at the soda or posting treatment arm represented an orange you will see a very meaningful benefit of a 33% risk reduction or 28 fewer events over the 18 month study period it needs very expensive hospitalizations.

Third the benefit is seen rapidly with a statistically significant separation established by day 28.

This is important because once someone is hospitalized for heart failure, you want to keep them out of the hospital and hospitals are often evaluated based at least in part on short term readmissions with sizable potential penalties for Readmissions within 30 days.

We believe the magnitude of the benefit and the rapid onset of the benefit.

It makes the data from soloist, especially compelling.

Not only to patients feel better they feel better quickly and they come back to the hospital less often.

Which patients dread physicians and hospitals want to avoid and payers want to avoid paying for it.

And this next slide you will see that the score data mirrored the results seen in soloist.

Once again in this study we looked at patients with type two diabetes, who were not hospitalized but had risk factors for cardiovascular disease cause. This is evaluating more of the chronic condition of heart failure as opposed to the acute condition evaluated and soloist study.

These two studies shared the same primary endpoint and we saw again quite significant reduction 26% relative risk reduction in total cardiovascular deaths hospitalization for heart failure, an urgent hospital.

Urgent heart failure visit.

Also a statistically significant with substantial relative risk reduction in both studies.

As noted earlier there is a growing body of evidence that the additional inhibition of S. T. O P. One provided by soda <unk> may provide an extra level of cardio benefit. In addition to the benefits scene with S. G. L. T two inhibition alone.

In our scored study we saw significant benefit in both M I and stroke, which has not been seen before with the other S. D O T only inhibitors.

And the scored study we noted there was a 32% reduction in fatal and nonfatal myocardial infarction, and 34% reduction in fatal and nonfatal stroke. Overall, there was a 23% reduction in M I and stroke with a significant P value of 0.0.

Zero two.

Once again, a significant differentiating finding has not been reported to date from studies of other members of the S. G. L. T. S. G L T class.

On this slide one of the most interesting findings from these two studies as shown.

In a pooled analysis of both trials, we looked at the hazard ratio across the entire spectrum of left ventricular ejection fraction and heart failure patients as you can see from the graph. There was a trend showing that is injection fraction increases the risk reduction remains significantly better than.

Placebo.

Most previous studies of other S. G. L. T inhibitors tend to show waning efficacy as ejection fraction increases, especially about 60%. So we believe this may be another point of differentiation soda propulsion we are.

Especially excited about the robust risk reduction observed in these studies across the entire spectrum of preserved ejection fractions with type two diabetes.

Huntley have limited treatment options.

At this point I would like to turn the call over to Jeff to discuss how are soloist and scored data may provide a unique competitive opportunity for lexicon Jeff.

Thank you Craig and good afternoon.

It.

As Craig mentioned patients with heart failure, often require hospitalization for acute events frequently multiple hospitalizations over their lifetimes.

These events are among the most important drivers for both the initiation of therapy and changes in the treatment regimen for heart failure.

A hospitalization for heart failure may be the first time, a patient is diagnosed something that is particularly common among patients who have heart failure with preserved ejection fraction or have pet and therefore, a driver for the initiation of therapy for.

For previously diagnosed patients or worsening heart failure hospitalization has a tremendous impact on the desire of both patient and physician to change the patient treatment regimen, not only to reduce the likelihood of break.

The next to the band requiring hospitalization, but also to better address the patient's day to day burden of disease.

Importantly, though it is not just patients and physicians who are driven to act.

Hospitals and payers are also highly motivated to reduce the recurrence of heart failure, Vince requiring hospitalization.

Reducing rehospitalization within 30 days of discharge for example is a particularly particular importance to hospitals, which face penalties for readmission within 30 days to reduced Medicare payments and lower ratings.

From a payer perspective hospitalizations for heart failure are extremely costly requiring multiple overnight hospital stays and resulting in one of the highest financial burdens to the health care system.

Everyone involved the patient physician hospital and payer is strongly motivated to reduce the recurrence of <unk> heart failure hospitalization.

This alignment of interest tied to the urgency of action associated with symptomatic burden and the frequency at which these high cost hospitalization events occur set his heart failure apart from many other cardiovascular indications manage with drug therapy.

Overall, we believe hospitalization due to worsening heart failure is a key leverage point with potential as a prime competitive opportunity for soda to <unk>.

As I mentioned before this key leverage point for the initiation or change of therapy is a very frequent Tibet. In fact heart failure is the leading cause of hospitalization for Americans over the age of 65 with about a million hospitalizations annually <unk>.

These hospitalizations involve substantial burdens not only for patients, but also for the health care system, where there is a high level of interest in reducing in managing the associated costs, especially given the concentration among Medicare patients.

Our studies were conducted in people with type two diabetes, which represent about 44% of hospitalized heart failure patients.

This patient population has been growing over time, a trend that will likely continue as the overall population continues to age and rates of diabetes and cardiovascular disease continue to increase.

Cardiology specialists are the primary decision makers regarding heart failure treatment.

Among cardiologist, there's an even more concentrated grip that account for <unk>, most heart failure treatment decisions based on our analysts analysis, taking into account prescriptions for branded heart failure medications approximately 8000 cardiologist account for approximately 60% and perhaps more the overall market.

<unk> and the audience that we believe we can effectively and efficiently engage with the field force of fewer than 100 people.

Along with a concentrated prescriber base. There is also a geographical concentration of local and regional centers, where heart failure patients are treated further enabling are efficient engagement with a modest size field force.

We are currently building out the leadership of our lunch ready and this team and working through a spectrum of other activities in preparation for a potential launch next year. If approved we are very much looking forward to bringing this potential new therapy to patients suffering from heart failure and living with type two diabetes.

In summary, we believed soda conclusion is differentiating advantages and a market that is poised for growth.

We are poised to enter the market is S. P. O T inhibitors are being adopted and the standard of care and have fresh and opportunity if approved to be one of three participants indicated for the treatment of heart failure in a class that has the opportunity to grow for minimal to very substantial share aided by favorable data and now.

Nation in treatment guidelines.

We believe that if approved.

So did the pledge and will be well positioned as well to address the particular challenges of half past, which has been almost entirely lacking in treatment options and represents more than half of all patients suffering from heart failure.

Soloist phase three outcomes data in worsening heart failure represents a unique potential competitive advantage for soda to pleasant at the most important leverage point for the initiation or change of therapy.

Given the severity of the situation for patients and the costs involved prepares in hospitals. We believe this leverage point offers a prime competitive opportunity for set of pleasant.

Especially in this setting but also in heart failure generally therapeutic decisions are made by concentrated basic cardiologist, which we believe we can effectively engage with the focus field force.

Given the emerging growth opportunity for the <unk> inhibitor class and Kitty for heart failure.

Characteristics of the heart failure market and the particular strengths of our data we feel that we can be highly competitive in the marketplace and effective in building value for our stakeholders.

In addition to soda to Pleasant, we continue to advanced a number of other innovative programs with the potential to drive long term value.

Wanted to spend a few minutes moments to update you on the status of some of these programs.

Lexicon has a history of bringing innovative discoveries from our own labs into and through development and two approval and market.

If we are successful surgical pleasant and heart failure will be the third time, we successfully received regulatory approval for one of our innovations.

To date, we have brought one drug from our own labs through development and regulatory approval into market is your mellow, which we sold to last year to Sarah and relating to which we have a continuing milestone in royalty interests, which I will describe in a moment.

Noted on this pipeline chart, we received approval for cynical pleasant as a treatment for type one diabetes in Europe.

We're continuing to seek a potential path forward in the United States for type one diabetes, having previously received a complete response letter from the F D a for that indication.

We believe soda to pleasant demonstrated a positive benefit risk profile and the largest phase three development program ever conducted in type one diabetes and has the potential to become an important new treatment option as an adjunct to insulin for type one diabetes patients and we are currently pursuing an administrative hearing the FDA on whether there.

Grounds for its previous denial of our NDA for type one diabetes the.

The administrative hearing process is currently on hold while we engage in good faith discussions with the F. D. A and hopes that together, we can find a potential path forward into syndication, we will share more at these these discussions continue.

Other than soda <unk>, Alex 9211 is our most advanced program in development and we believe it has the potential to help millions of people suffering from neuropathic pain.

Alex 9211 is completed phase one successfully and is currently being evaluated in two phase two clinical trials, both of which we expect to read out topline results in the first half of next year.

In addition to the programs that we are developing directly we also have interests in the form of potential milestones and royalties and other programs that have been developed or facilitated using our technology.

We have a milestone in royalty interest in pelotas that Apple for Billy or track cancer.

<unk> was discovered developed and commercialized at Lex as lexicon as are mellow, which I mentioned earlier, we sold the product to to share last year for a significant upfront payments and are eligible for up to $65 million in milestone payments and mid teens royalties moving forward. If they are successful in developing it for <unk>.

Sure.

We also have a milestone in royalty interest in U T. T. R. 11, 47, a which is currently in phase two clinical development for immune system disorders. This program came out of our longstanding target discovery and biotherapeutic because alliance with genetic.

As you can see there's a deep development pipeline with multiple opportunities to build additional value in the future.

Before getting into the queue three financials I wanted to spend a moment to talk in more detail about Alex 9211.

Neuropathic pain effects and large portion of the population with the worldwide market protected to grow it over 13% a year to $13.2 billion by 2026.

There is estimated to be a prevalence of about 12 million people worldwide suffering from diabetic peripheral neuropathy pain and 600000 people suffering from Postherpetic neuralgia in 2026.

Despite neuropathic pain affecting millions of people there remains a high level of unmet need for those suffering from the condition.

The current approved therapies are limited by a lack of efficacy compounded by debilitating side effects.

As a result, many people turn to opioids to experience some level of relief, which of course carry their own risks of potential abuse and addiction.

We feel Alex 9211 may overcome many of these shortcomings of current therapies.

Alex 9211 is a potent early delivered selective small molecule inhibitor of a K, one which is a pathway. We believe may have utility in reducing neuropathic pain, while avoiding the addictive downsides of the Oprah good pathway or the somnolence or difficulty concentrating see let's get the <unk>.

Late last year, Alex 9211 received fast track this nation for from the F. D. A for the treatment of diabetic peripheral neuropathies pain.

To date are preclinical data for Alex 9211 has demonstrated excellent CNS penetration and reductions in pain behavior in animal models of neuropathic pain without the motor impairment seen in such models with Gaba pension noise.

Very importantly, we've conducted several preclinical tests to confirm Alex 921 one's independence from the opioid pathway and so far we have been no concerns around addiction with Alex 9211.

We have conducted single and multiple ascending this phase one studies in healthy volunteers to study the safety Tolerability and pharmacokinetics of Alex 9211.

These studies supported the preclinical profile and.

And Alex 9211 was well tolerated with disproportionate pharmacokinetics that are supported of once daily dosing there were no drug related serious adverse events and the most common adverse events, where headache and dizziness.

We are currently conducting to phase two proof of concept studies Abele X men 211.

One is in diabetic peripheral neuropathy pain and the other one is an postherpetic neuralgia.

They are both the double blind placebo controlled parallel group Multicenter studies.

The D. Pnp's study is a three arm study, while the PHN study as of two arms study.

They both share the same primary endpoint change from baseline the week six an average daily pain score.

Patient enrollment is ongoing in each of these phase two clinical studies, we expect topline results from the studies in the first half of 2022.

Turning to key aspects of our third quarter financials, you will see that we ended the quarter with $129 million in cash and investments. This.

This puts us in a strong financial position to fund our prelaunch activities for setting up a pleasant.

Our ongoing clinical activities for L X 91, one in our plan discovery efforts.

If approved the commercial launch of southern clothes and will require additional resources for which will be looking to options that include potential strategic partnership for the commercialization of set it wasn't outside of the United States.

As indicated in our press release. This afternoon, we had minimal revenues during the quarter as compared to $6 $6 million from the third quarter last year due to the absence of product revenues in the current quarter, resulting from the sale of your mellow during the third quarter of last year.

Research and development expenses for the third quarter decreased to $15.7 million from $40 $1 million for the corresponding period in 2020.

This was primarily due to decreases and external clinical development costs relating to set a closing resulting from the completion of clinical studies.

Selling general and administrative expenses for the third quarter decreased to $7.3 million from $12 million for the same period in 2020, primarily due to lower salaries and benefit costs. As a result of the reductions in personnel in September 20th 2020, and lower marketing expenses all associate.

With the sale ads or milk.

In total we had a net loss for the second quarter of $23.1 million or 16 cents per share as compared to net income of $82.6 million or 71 cents per diluted share in the corresponding period of 2020, which included a $132.8 million a gain from the sale of their milk.

Net loss for the third quarter of 2021, and 2020 included non-cash stock based compensation expense of $2.7 million and $1.9 million respectively.

Overall, we are in good position to continuing to two advanced <unk> and Alex 9211.

Would now like to turn the call back to Leno.

Thank you Jeff.

I'd like to close out today's call by highlighting some key anticipated milestones of events that you can <unk> you can expect as we advanced soda flows and Alex 9211, we.

We continue to work diligently to submit the NDA for soda flows in heart failure around your in.

Our launch readiness teams are gearing up on both the commercial and medical sides as we prepare for potential launch in the US next year.

As Jeff mentioned, we are actively seeking a strategic partner to commercialize soda flows outside the United States.

We plan to continue highlighting the data from a soda can close those studies at upcoming Congresses and through peer reviewed publications.

On Alex not to one one front, we're looking forward to top line data from hour to phase two studies reading out in the first half of next year.

With that I'd like to thank you for listening today and thank you for your continued support of lexicon and I would welcome any questions. You may have at this time.

Alright, and please open a lot of questions.

Ladies and gentlemen at this time, if you would like to ask a question. Please press Star then the number one on your telephone keypad again, that's star one to withdraw your question press the pound key will pass for just a moment to compile the Q&A roster.

My first question is from the line of <unk> No two <unk> with Citigroup.

The amount of the team. Thank you for taking a question well now I'm curious what do you make it effective ESC soda.

Closing in the heart that other guy.

And can lead to diabetes, even though.

One that is.

Yet to be approved and et cetera.

You got a great question, we were very pleased to have that happen I think what they look at us to preponderance of evidence of clinical evidence does that there's been published and they make their decisions based on that overall evidence and so we were very pleased that they accept the evidence as it was in the absence.

[noise] of actually having approved at this point so it was a very significant wind for us.

And we started to look forward to leveraging that wind going forward as we seek regulatory approval.

And one for Jack.

Okay program, Jessica could you just talk a little bit about what you need.

See on the efficacy side and a toothache too.

It would be kind of profiling, who would need to advance 91, one of the pivotal trials in both.

Peripheral neuropathy and poster.

Postherpetic neuralgia.

So the first thing I would say these are concepts days. So these are the first studies that we've done in patients. So what we're really looking for is a signal and neuropathic pain.

In these studies and then we'll be making decisions about next steps and development posts that time period.

So that's mostly what we're looking at is to prove the concept of a K, one inhibition and neuropathic pain and following that will decide whether we can go we need to do more of those changing whether we can go into.

Some other phase two three setting or the like but that'll basically depend on the outcome of these studies.

And could you just.

Advanced both both into phase three.

Both both indications that it.

So diabetic peripheral neuropathies pain is obviously, a much larger market opportunity than Postherpetic neuralgia.

Obviously, we're going to look at the data from both of these studies and I would just say that Preclinically, we have evidence of an effect in multiple.

Aren't.

Areas multiple different models of neuropathic pain or our goal with this overall.

Or what we what we would envision is that there is an opportunity across multiple types of neuropathic pain and would ultimately want to be developing it.

Lee across different types of neuropathic pain. So as we think about how to develop this further we're gonna be looking at that and looking at these first two proof of concept studies is launching point off for at four of different elements of neuropathic pain.

Okay. Thank you.

Your next question is from the line of Yes mean rahimi with Piper Sandler.

Hi, everyone. It's a day on the line for you as well. Thanks for taking my question I have a couple of questions here. So I'll just start out with the first one so based on the efficacy data generated today from all the SCLC inhibitors in the recently updated easy guidelines I was just wondering if you could just.

Pine on how you think a soda with those and can be positioned if approved and what would be the critical point of care for the struggle ahead, an additional up question after that.

Well I think it is a great question, so I'm gonna have Craig.

Restate some of the things I have to keep carry forward in the presentation, Greg your thoughts.

Yes. Thank you now and thank you for the question.

We believe that the data set as we went through and the data, particularly in the recent or worsening heart failure.

Is is differentiating at this point and will really be the only one with that data and swimming we.

<unk> B.

How come with the FDA regarding patient indication that we will be indicated for that you. So I think the data is compelling we hope.

All of it that was presented today.

Provides that that background, but I think in summary, it is really the breath of the data.

The speed of beyond set in the magnitude of the benefit particularly across the patients with the range of ejection fraction.

And would be additional may benefit, particularly the stroke signal.

And particularly with specific outcomes data in recent in worsening heart failure are three key.

Milestones that.

Others that have studied the other agents in the <unk> class do not have.

Great Thanks for that alright.

And then my.

Second question here do you think the initiation.

Of soda go clothes and treatment in the hospital setting could resonate well with patients.

And could lead to a better adherence compared to patients in the outpatient setting with less severe heart failure on at school to inhibitors and I just wanted to see if you've had any feedback from cardiologists, who treat hospitalized patients.

Well, that's that's a really really good question I'm Gonna I'm Gonna turn it back over to Craig.

Yeah, we agree.

Worked in the industry, a long time I've worked across products that were indicated shortly after discharged from the hospital and the patient goes back to the community cardiologist.

I think what you have to remember in the group of patients with recent or worsening heart failure is there really teetering on a knife edge.

And they are really playing this very delicate dance between their kidney in their heart.

Regarding the amount of fluid that is not too little that they go into heart failure, because they don't have enough volume or too much and they go into heart failure, because they've got too much volume.

And so they they generally the hospitalization is to get the treatment right. As you can see there's lots of drugs. These patients are on and this is just for their heart failure. There on many other medications as well.

So we believe that when the patient to use the terminology in the hospital he gets tuned up.

In the hospital, they don't want to change that regiment nobody wants to change that regiment when the patient shortly leaves the hospital a patient the provider the payor.

The patient is stable and they leave the hospital and they spent a couple of days getting to that point.

Everybody's incentivize to really give this new regiment.

Good.

Good try a good trial. So we believe that's the ideal time, because if you are trying to get the patient.

Shortly after the discharge.

Who's going to stop and change the patients care.

It's a very timely and challenging clinical scenario get it right. When they are in a hospital discharge I'm in good shape.

And hopefully they'll stay at a hospital at least for 30 days and hopefully much longer.

Great I appreciate the additional color.

Your next question or a third line.

Sorry, no that was it thank you.

Thank you.

Your next question is from the line of the Jessica Fine with the T. P. Morgan.

Hey, guys. Thanks for taking my question.

With this data for cynical frozen what's your latest thinking on a X U S partner to help you maximize that.

Potential of the product.

Jessica Great question subsequent to ESC guidelines I would say that.

I would say those interests have have grown.

And so our confidence is growing that we most likely we will get a partner outside the United States.

Got it okay.

Have you tried to proceed breakthrough designation at all first soda I think I saw that and I've got it for half past. So I'm wondering if that's something we've got.

Yeah, we were very curious about it because generally breakthrough designation is assigned to phase two products, where you you have more engaging with the FDA around the program.

Going into phase III, so, we're a little bit surprised about.

That that outcome.

The other thing is that once you seek breakthrough designation, sometimes can slow you down in terms of what you want to accomplish so for us.

We've made the decision to to just push ahead.

And go as fast as we can get the get the NDA submitted they were in a unique position because the product was already market. They only really had to do one additional study for us in da where we have two very significant studies and so it takes a little more work for us to get that done.

But I'm very pleased to see the Guy breakthrough designation of just to the point where made earlier. It just puts more emphasis on S. C O T class.

Being a credibly important class for heart failure and from our perspective, they can lay the groundwork in late a path and we'll be happy to to get on that path and run with them. Because we believe the market is absolutely going to grow faster.

Astronomically.

Okay got it uhm, maybe shifting gears is it possible to refine it all your expectations per timing for the pain data.

No I think we're going to stick with first half of next year I have not been.

Silent about we've had some challenges round recruiting.

As we started the study in the middle of of of.

The COVID-19 challenges and.

Get patients out of the house and into these studies.

So we expanded the timeline to give ourselves a little bit more time to get it right. The second thing that was important it was to make sure. We work with our Ciara who also had some may have had some challenges along the way that we needed to iron out and I think at this point in time, we just we just have to take the time and effort to make sure we.

We were in row, the right patient because there's you know CNS studies tend to have very high failure rate and a lot of that is because patients selection. We don't want to put ourselves in that category. Our best effort. Here is Jeff has said is.

We're looking to get a signal and the best way to do that is to have very tight.

Uhm inclusionary, an exclusionary criteria. So we can get that signal and better understand how best we go from there.

Got it thank you.

You bet.

Again to ask a question. Please press star one on your telephone keypad again, that's star one.

Our final question from the line of games with a stringer with a medium and company.

Hi, This is Ben ricard seating for Joni.

Can you just do you are you pretty much reviewed this but if you could just kind of talk what would the potential cynical close and label and heart failure and looked like in other words, how would you see the <unk> that really positioning the drug.

Great question, I will turn out with over to Craig.

Thank you for the question. It really is a very much similar to the two populations that were in the New England Journal of Medicine papers, and we described today.

Is that we are seeking to different populations, both of which with the similar and points of heart failure defined by car.

Cardiovascular death.

<unk> failure, an urgent unscheduled visit in.

In both a high risk group of patients with diabetes and other risk factors for major cardiovascular events in heart failure.

And for patients with recent in worsening heart failure for heart failure related events and that is really that the path that we are taking with the agency.

And we believe we've got the data.

As we walk through with you the two clinical studies that would support those two distinct populations as we tried to show in the stylized graphic.

Of which have the heart failure and points as their primary endpoint.

Great. Thanks, and just another question if you could just talk about what it would take to commercialize cynical appointment for heart failure on your on your own and what would be the next steps in terms of building on commercial infrastructure.

Great question, I'll, I'll start and I'll turn it over to Jeff and we've already started [laughter] I think we are we have to move a lot faster than we have moved historically.

Base.

Based on our engagement as I've said in the last call based on engaging with the FDA.

Based on what I think Jessica question around breakthrough designation that one of the others have received we fully expect that we're going to be on a pathway with this drug will be in market much sooner than later going into next year. So for US we have to start the build out much sooner than later so this year, we have already started and so.

From there will be uniquely play position once the product is submitted and once we certainly get uhm.

Get the designation that we're looking for you know after with submitted to the NDA I think you'll see us move even faster we're laying the groundwork now that allows us to have those trigger points where.

Well, we can pull the team on pretty fast.

I'll stop there and just unless you had anything you want to add from there I.

I mean, we're building out our leadership team right now we expect to have some people in.

We already have some people and we're expecting some others and before the end of the year and were engaged in a number of <unk> extra.

Activities with external collaborators and partners too.

To be well prepared for launch a lot of what we do will be tied into to.

The indeed submission acceptance, which will be happening over the course of the end of this year. The beginning of next year for the acceptance and but we are already doing a lot of work to get ready we were.

A relatively short time period off from lunch, so those preparations needs to be underway and and they are.

Awesome. Thank you I just have one last quick one do you think there's any additional gating factors for the NDA submission.

No get a submitted.

[laughter] awesome that was for the benefit of my shame.

As for the question.

[laughter].

Turn it back over to the upper if there's other questions.

There are no further questions.

Are there any call then let me.

Yeah, Let me take a moment just thank everybody for joining us. It really is an exciting time your legs come <unk>.

Managing multiple priorities and we're very fortunate as a fairly small company with multiple priority. So we're very very very pleased about that.

I think that.

The Ese guidelines played out the way we had hoped and I believe the American Heart Association May may follow suit in the future.

It really is laying the the the slang.

Lang Lang down the future for what the S. C. O T class can do we believe very strongly we have found a very unique position for soda flows in.

That we can carve out at the point in which there's a great need for change and I think we've we've tried to describe that today, where that is and.

And when we look at that very clearly and concisely, we know that we can we can.

We can hire a fairly.

Very well talented and ready group of folks that that can get into that space and make a big difference. We certainly will punch above our weight great [laughter] I feel very confident about that the first big decision, we made I think to move into the space.

You heard today that was Dr. Greta, which we brought on in August and we haven't slowdown since then and will continue to bring in a talented is necessary for lexicon to make a big difference as we go forward, we're keeping a very close eye on 9211, I think this could be something remarkably special and we will have to make sure that we stay very diligent.

About how we manage the clinical program and not try to rush it and make sure we get the stigma that we're looking for so stay tuned we'll have much more to say.

And last but not least we have been engaged with the FDA around T. One D type one for soda can flows mm.

We will characterize those conversations as we.

As we have.

Future closure on some of those conversations that I think will be coming forward and in the near future and make sure that we call that back out so a lot of good things happening at the company won't have to manage it all the way through but we're very confident that will go into 2022, well positioned to take advantage of those opportunities. Thanks again for listing and we look forward to the next call.

This concludes lexicon pharmaceuticals third quarter financial results conference call. Thank you for participating you may now disconnect.

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